Call the mega-rally on Monday (Nov. 9) the day investors in “group” companies cheered.
By “group” companies, we mean the companies behind the venues that make their sales (and, they’d hope, profits) on groups of people getting together.
The simple fact of the matter is that through the past several months, and currently, large groups have been unable to get together, or people have been unwilling to get together.
But the news that Pfizer may be on the cusp of bringing a COVID-19 vaccine to market — and that tens of millions of people may be vaccinated within the next few months — has all sorts of implications for travel companies (such as airlines) and leisure-oriented firms (such as movie chains). Let’s think of them as companies that rely on tangible foot traffic, bodies in seats, tickets punched, games played. (We’ll assume stadium operators are cheering from their respective stands, too.)
Here’s just a smattering of the soaring through the day. AMC Entertainment Holdings, the cinema company, saw its shares surge 51 percent on the day. Dave and Buster’s Entertainment was up more than 33 percent. Airlines were up double-digit percentage points. Carnival, operator of the eponymous cruise line, was up 39 percent. Shares in The Walt Disney Company were up 11 percent on the day.
The go-out-and-do-stuff companies, then, outpaced the stay-at-home names — like Zoom Video Communications, which sank 17 percent.
Interestingly, restaurant and big box retailer stocks took it on the chin during the day. Chipotle Mexican Grill was down 3.6 percent. Walmart was off about 1.5 percent. Domino’s was down more than 5 percent.
Now, it’s indeed the case that the rally we saw Monday represents a sanguine outlook that, with a realistic timeline, we may indeed be congregating at places that have been shunned in the midst of a pandemic.
Looking at the Hybrid Models
But the declines in what we might term “hybrid” stocks — the retailers and the restaurants that had seen huge tailwinds under the eCommerce efforts (up, say double-digit or triple-digit percentages) — may hint at fears over cannibalized sales.
The quick-service restaurant (QSR) that banks on digital orders and curbside pickup, if it must pivot to in-store, brick-and-mortar locations, may feel margin pinches if traffic shifts notably away from digital to in-store.
The relief is palpable that a vaccine may be in sight. As PYMNTS reported, 59 percent of consumers surveyed by PYMNTS/PayPal reported they would need to know that a COVID-19 vaccine was readily available before going back to their pre-pandemic habits.
And, as PYMNTS noted, 38 percent said having a readily available vaccine is the most important prerequisite for returning to their old lives. Only 6 percent reported that their single most important consideration would be state and local governments relaxing restrictions.
In a way, the data show a sense of “wait and see” — namely that the entrenched digital habits of consumers are likely to stick. Many of the individuals we surveyed — at 79 percent — have said that merchants have bettered their digital offerings. Curbside pickup has been a leading avenue of focus for merchants, added to what’s already been on offer.
Thus, fears of near-term cannibalization may be misplaced. A dollar gained at the physical point of sale where groups gather might not necessarily mean that a dollar must be lost at the digital register.
Indeed, there’s room for both in a realm where the consumer continues to spend, and where the pandemic, perhaps, is finally rendering companies truly omnichannel.